Davis, K. Paul

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Volume 69 Issue 1 Article 5 December 1966 Attorney and Client--Acts of Real Estate Broker Constitutiong Unauthorized Practice of Law K. Paul Davis West Virginia University College of Law Follow this and additional works at: https://researchrepository.wvu.edu/wvlr  Part of the Legal Ethics and Professional Responsibility Commons, and the Legal Profession Commons Recommended Citation K. P. Davis, Attorney and Client--Acts of Real Estate Broker Constitutiong Unauthorized Practice of Law, 69 W. Va. L. Rev. (1966). Available at: https://researchrepository.wvu.edu/wvlr/vol69/iss1/5 This Case Comment is brought to you for free and open access by the WVU College of Law at The Research Repository @ WVU. It has been accepted for inclusion in West Virginia Law Review by an authorized editor of The Research Repository @ WVU. For more information, please contact ian.harmon@mail.wvu.edu. CASE COMMENTSThe principal case well recognizes that judicial review of thedecisions of administrative agencies is limited, not only by thedefinitions contained in the act, but also by policies adopted bythe courts. These limitations on review do not appear to havecreated significant problems incident to due process of law re-quirements. Other issues on judicial review of administrativeaction under the West Virginia Administrative Procedure Actare certain to arise, 8 but the court's decision in the principal casewill serve well to shape the pattern of judicial review in thisjurisdiction.Paul Robert RiceAttorney and Client-Acts of Real Estate Broker ConstitutingUnauthorized Practice of LawD, a corporate real estate brokerage firm, was filling inearnest money contract forms and securing thereto signatures ofbuyers and sellers of real property. The D was also using andpreparing form deeds and other instruments necessary to clear ortransfer title. The forms used had been composed by lawyers.P, the Chicago Bar Association, sought to enjoin the alleged un-authorized practice of law. The circuit court found the formsused in the initial contracts were a necessary incident to the realestate business, but held that the use of forms in the preparationof deeds and other subsequent instruments constituted an un-authorized practice of law. The appellate court held that neitherthe initial contracts nor the subsequent deeds and related instru-ments could be filled in by D. Held, appellate court affirmedin part and reversed in part; circuit court affirmed. A real estatebroker may properly fill in the usual form of earnest money con-tract or offer to purchase where such involves merely supplyingof factual data, but the drawing or filling in of blanks on deeds,mortgages and other legal instruments subsequently executedrequires the peculiar skill of an attorney and constitutes thepractice of law. Chicago Bar Ass'n v. Quinlan & Tyson, Inc., 214N.E.2d 771 (Ill. 1966).The question of what real estate services require the skillpeculiar to one trained and experienced in the law had been38 Harrison, supra note 1, at 190.1966]1Davis: Attorney and Client--Acts of Real Estate Broker Constitutiong UnaDisseminated by The Research Repository @ WVU, 1966WEST VIRGINIA LAW REVIEWanswered differently in various jurisdictions.' However, nearlyall decisions recognize that the exclusion of all but attorneys fromthe practice of law is in the public interest. The purpose of theexclusion is to guarantee that the public has the benefit ofcompetent and unbiased legal advice.'In holding that the real estate broker could not prepare or draftany contracts or fill in any form contracts or form deeds, theappellate court and the dissenting opinion of the supreme courtin the principal case, reasoned that only an attorney possesses thenecessary skill and expertise to assure the legal validity of suchtransactions. The appellate court stated several times in its opinionthat public interest was the basis for its decision.'In 1943 the American Bar Association and the National Associa-tion of Real Estate Boards adopted a Statement of Principleswhich was widely distributed throughout real estate circles. Thefollowing is an excerpt from the circular: "The Realtor shall notpractice law or give legal advice directly or indirectly; he shallnot act as a public conveyancer, nor give advice or opinions asto the legal effect of legal instruments . . . "' The holding in theprincipal case is in keeping with the spirit of the coordinatedefforts of these two organizations.'One distinct trend of cases has reasoned that, if the activityalleged to be practicing law is incident to the real estate business,public convenience demands that the activity not be consideredan unauthorized practice of law.6 The "incident theory" recog-nizes that certain areas of the commercial and legal fields overlapand can be concurrently performed by both. But, in these casesthe courts are still left with the problem of deciding what activitiesare, in fact, incident to the real estate business. In solving thisproblem, the courts have held: (1) both the initial contracts andIAnnot., 53 A.L.R.2d 788 (1957).2 Gardner v. Conway, 234 Minn. 468, 48 N.W.2d 788 (1951); Stateex rel. Wright v. Barlow, 131 Neb. 294, 268 N.W. 95 (1936).' Chicago Bar Ass'n v. Quinlan & Tyson, Inc., 31 Ill. App. 2d 575, 203N.E.2d 131 (1964).4 AEA CoN, rrrX ON UNAUrHoRizED PRAcTIcE OF LAw, A STUDY OFUNAUTHRIomZD PRAcTCE OF LAw 32 (Sept. 1951).5 It must be pointed out that the Canons of Professional Ethics areviolated by the lawyer who drafts a form contract or form deed used by areal estate broker if the broker is practicing law in completing the forms.Canon 47, ABA, CA~oNs OF PROFssIONAL ETmcs.' Ingham County Bar Ass'n v. Wather Neller Co., 342 Mich. 214, 69N.W.2d 713 (1955); Cowen v. Nelson, 207 Minn. 642, 290 N.W. 795 (1940).[Vol. 692West Virginia Law Review, Vol. 69, Iss. 1 [1966], Art. 5https://researchrepository.wvu.edu/wvlr/vol69/iss1/5CASE COMMENTSthe subsequent deeds are incident;7 (2) only the initial contractsare incident;8 or (3) neither the initial contracts nor the subse-quent deeds are incident.9In considering form contracts specifically, most of the decisionshave concluded that filling in of factual data in a form typecontract is a simple activity requiring no more than clericalknowledge and ability, and as such, would not constitute the prac-tice of law.' ° A survey of decisions made in the past decadedisclosed a majority of the cases concurring with the decisionin the principal case, i.e., permitting real estate brokers to fill inform contracts in their initial transactions."No case similar to the principal case has been before the WestVirginia court. However, under its inherent power, the WestVirginia Supreme Court has adopted, and revised, a definitionof the "practice of law." Briefly stated, the court has said thatone not a lawyer is participating in the unauthorized practice oflaw if, with or without compensation, he (1) gives advice onlegal matters, (2) prepares legal instruments for another, or (3)represents another before a judicial or administrative tribunalwhich will reach a legal conclusion. Such activities will be un-authorized practice of law whether or not related to anotheractivity. 2 This definition appears to be the only expression ofthe court concerning the preparation of legal instruments. Thedefinition appears to leave the court with a future decision as towhether or not "prepare" includes filling in blank contracts.It may be that the definition, standing alone, may prohibit thebrokers from preparing deeds, deeds of trust or release deeds.If the language in the definition be not conclusive on this point,one may reflect briefly on the purpose of the 1965 legislature inrequiring the drafter of a deed to annex his name thereto. 3 Thequestion which remains unanswered is whether real estate brokers7 Hulse v. Criger, 363 Mo. 26, 247 S.W.2d 855 (1952).8 Keyes Co. v. Dade County Bar Ass'n, 46 So.2d 605 (Fla. 1950).9 Chicago Bar Ass'n v. Quinlan & Tyson, Inc., 31 IMI. App. 2d 575, 203N.E.2d 131 (1964).10 Gustafson v. V. C. Taylor & Sons, Inc., 138 Ohio St. 392, 35 N.E.2d435 (1941).1 Indiana State Bar Ass'n v. Indiana Real Estate Ass'n, 244 Ind. 214,191 N.E.2d 711 (1963); State Bar of Michigan v. Kupris, 366 Mich. 688,116 N.W.2d 341 (1962).12 Definition of the Practice of Law, app. to W. VA. Sup. CT. R., inW. VA. CODE at 371-72 (Michie 1966).13 W. VA. CoDE: ch. 39, art. 1, § 2(a) (Michie 1966).1966]3Davis: Attorney and Client--Acts of Real Estate Broker Constitutiong UnaDisseminated by The Research Repository @ WVU, 1966WEST VIRGINIA LAW REVIEWin West Virginia may use form contracts in their initial transac-tions.By stating it is irrelevant that the instrument prepared is con-nected to another activity, 4 the West Virginia court seems to besaying that the "incident theory" will not be recognized. But thecourt, in discussing the completion of Workmen's Compensationforms in West Virginia State Bar v. Earle y,"5 noted that "thecompletion of such blank forms does not require any knowledgeand skill beyond that possessed by the ordinarily experienced andintelligent layman .... " This reasoning is similar to that usedby the Illinois court in the principal case and it could provide thebasis for a holding by the West Virginia court that no unusualskill or knowledge is required in filling out forms for the initialreal estate transactions. Indirectly, this would be recognizingthe "incident theory."In Commonwealth v. Jones & Robins, Inc.,"7 the Virginia courtheld that a real estate broker was not engaged in the practice oflaw when he prepared, drafted or used simple contracts of saleas an incident of the regular course of his business, but that thedrafting of deeds, deeds of trust, mortgages and release deedswas not incident to his business and was in fact practicing law.The Virginia court defines the practice of law as: "with or with-out compensation, to prepare for another legal instrument of anycharacter, other than notices or contracts incident to the regularcourse of conducting a licensed business."" It is unlikely thatthe Virginia court would have arrived at the same decision hadthat tribunal been construing the corresponding part of the WestVirginia definition which provides that one is practicing law when"one undertakes, with or without compensation and whether ornot in connection with another activity, to prepare for anotherlegal instrument of any character." 9 Thus, it appears that theWest Virginia court, if it were to strictly apply its definition ofthe "practice of law," would require the initial contracts in a realestate transaction to be prepared completely by a lawyer.14 Note 12 supra.15 144 W. Va. 504, 109 S.E.2d 420 (1959).,6 d. at 526, 109 S.E.2d at 434.7 186 Va. 30, 41 S.E.2d 720 (1947).' VA. SuP. CT. R., 171 Va. XVII (1938). (Emphasis added.)19 Appendix to W. VA. Sup. CT. R. at 371. (Emphasis added.)[Vol. 694West Virginia Law Review, Vol. 69, Iss. 1 [1966], Art. 5https://researchrepository.wvu.edu/wvlr/vol69/iss1/5CASE COMMENTSThe principal case represents the modem tendency, to permitreal estate brokers to complete form contracts in their initial trans-actions while restricting the preparation of deeds and other subse-quent documents to lawyers. This approach attempts to balancethe public interest and public convenience. However, the WestVirginia court's definition of "practice of law" obviously indicatesthat its primary concern is the protection of the public. Whetherthe West Virginia court will follow the principal case appearsto depend on a future determination, based on Earley, whether"prepares legal instruments" includes a mere filling in of factualdata in form contracts and must be completed by an attorney.K. Paul DavisConflict of Laws-Long Arm Statutes-Sufficient Minimum Contactfor In Personam Jurisdiction over Foreign CorporationsD, a corporation, loaded goods on a railroad car in Californiadestined for South Dakota. D2, a corporation, was in charge oftransporting the goods from California to Kansas where theywere placed on another carrier for transport to South Dakota.Therefore, D2 had no contracts within South Dakota. P was injuredin South Dakota while unloading the goods. The injury wascaused by the alleged negligent loading and transporting of thegoods which occurred outside the State of South Dakota. Pbrought an action against D1 and D2 for the injuries received inSouth Dakota under South Dakota's "long arm" statute. Thestatute provides that when a foreign corporation commits a tort"in whole or in part" in South Dakota, against a resident, suchcorporation will be subject to in personam jurisdiction. D1 and D2moved to quash South Dakota's jurisdiction on the grounds thatthey could not be reached under South Dakota's "long arm" statute.Held, motions granted as to both D1 and D2 but with leave toamend in respect to D1. Although the injury occurred withinSouth Dakota, the evidence failed to show that any of the eventsin the causal chain leading to the injury occurred within thatstate. Consequently, D1 and D2 did not have sufficient minimumcontacts to satisfy the constitutional requirements of due process.1966]5Davis: Attorney and Client--Acts of Real Estate Broker Constitutiong UnaDisseminated by The Research Repository @ WVU, 1966

Attorney and Client--Acts of Real Estate Broker Constitutiong Unauthorized Practice of Law

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Attorney and Client--Acts of Real Estate Broker Constitutiong Unauthorized Practice of Law

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